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Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc.

Denbury Resources Inc. · Nov 15, 2018 · 38 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 1
    Bank of America Merrill Lynch 2018 Global Energy Conference November 15, 2018 NYSE:DNR w w w. d e n b u r y. c o m
  2. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 2
    Uncommon Company, Extraordinary Potential Industry Leading Oil Weighting Extreme Oil Gearing Top Tier Operating Margin Favorable Crude Quality & High Exposure to LLS Pricing Vertically Integrated CO2 Supply and Infrastructure…
  3. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 3
    Denbury What We Are A Unique Energy Business Rocky 60% of production via CO2 enhanced oil recovery (EOR) Mountain Vertically integrated CO2 supply and distribution Region Cost structure largely independent from industry 3Q18…
  4. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 4
    Industry Leading Oil Weighting 100% 2Q18 % Liquids Production Oil Production 97% 97% NGL Production 90% 80% Peer Average (% Liquids) 70% Peer Average (% Oil) 60% 50% 40% 30% 20% 10% 0% DNR(1) Peer A Peer B Peer C…
  5. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 5
    Top Tier Operating Margin 40 2Q18 Peer Operating Margins (/BOE) 35 Peer Average 30 25 20 15 10 5 - Peer A Peer B DNR Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Peer K Peer L Peer M Peer N Peer O Peer P…
  6. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 6
    Gulf Coast Region Reserves Summary(1) (MMBOE) Proved + Tertiary Potential Tertiary Reserves Proved 127 Potential 306 Non-Tertiary Reserves Proved 21 Total MMBOE(2) 454 Tertiary Potential by Field(3) Mature Area 25 30…
  7. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 7
    Rocky Mountain Region Reserves Summary(1) (MMBOE) Proved + Tertiary Potential Tertiary Reserves Proved 26 Potential 534 Non-Tertiary Reserves Proved 86 Total MMBOE(2) 646 Tertiary Potential by Field(3) Bell Creek 20 40…
  8. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 8
    2018 Watch List 1H18 2H18 Development Oyster Bayou Facility Expansion Bell Creek Phase 5 Response West Yellow Creek Response CCA EOR Investment Decision Grieve Field Startup Delhi Tuscaloosa Infill Exploitation Cedar…
  9. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 9
    2018E Capital Plan & Production Guidance 2018 Development Capital Budget (1) 2018 Production Guidance (BOE/d) In Millions 300 - 325 Million 45 60,100 - 60,600 60,298 20 155 Tertiary 241 MM (2) 300-325 MM 95 CapEx 2…
  10. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 10
    Sanctioning CO2 EOR Development at CCA Cedar Creek Anticline Overview EOR Formation Details Red River Initial Formations Targeted Interlake Stony Mountain 1930s (Discovery) Field Discovery Timeframe (Oil) 1950s (Development)…
  11. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 11
    EOR Potential 400 MMBBL at Cedar Creek Anticline Planned Development Summary Phase 1 Red River formation development at East Lookout Butte and Cedar Hills South 175,000 net acres Targets 30 MMBbls of recoverable oil; first tertiary…
  12. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 12
    CCA Decades of Sustainable Production and Free Cash Flow Est. Incremental EOR Production CCA Project Highlights Phase 1 and 2 estimated incremental tertiary production 7,500 - 12,500 net Bbls/d for Phase 1 of 7,500 12,500 Bbls/d…
  13. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 13
    Exploitation A New Dimension for Growth Size of circles = Cost to test Costs per test range from 0.5MM 8MM - Testing in 2018 Large Short-Cycle Opportunity Set 20 30 Numerous exploitation targets across 18 28 Denburys 600,000…
  14. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 14
    Mission Canyon Mission Canyon Exploitation Added 2nd rig in late 3Q Successful test at Cabin Creek with 24 hour rate 1000 BOPD Cedar Creek Anticline Potential to add up to 5 additional Cabin Creek locations Well 6 (Oct 18) Began…
  15. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 15
    Tinsley Perry Sand Well 2 Overview Recovery Factor Proven light tight oil accumulation with low historical North Fault Block vertical well recovery; below current producing horizon Well 1 (2Q18) Successful first well with…
  16. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 16
    Powder River Basin Stacked Pay In Hartzog Draw Unit Hartzog Draw Exploitation North Dakota 20,700 gross / 12,900 net acres in Campbell & Shannon: 449 BOED IP Johnson Counties, WY Montana Rate, 94% Oil Wyoming…
  17. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 17
    Recent Debt Transactions Further Improve Leverage Profile Net Debt Principal Reduction Since 12/31/14 9/30/18 Debt Maturity Profile (In millions) RECENT TRANSACTIONS (In millions) Over 1 Billion Net Debt Reduction Amended and Extended…
  18. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 18
    Significantly Improving Leverage Metrics TTM Leverage Ratio 3Q18 Annualized Leverage Ratio Trailing 12 months Trailing 12 months 3Q18 3Q18 in millions (incl. hedges) (excl. hedges) (incl. hedges) (excl. hedges) Adjusted EBITDAX(1)…
  19. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 19
    Transformational Combination of & NYSE:DNR 21 w w w. d e n b u r y. c o m
  20. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 20
    The Combination of Denbury & Penn Virginia Adds High Value Investment Diversity Rocky Mountain Adds new core area in the oil window of the prolific Eagle Ford Shale play Region Large development inventory 560 Gross Lower Eagle Ford…
  21. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 21
    Why We Like the Eagle Ford Expansive play with large oil window Light Louisiana Sweet (LLS) premium oil pricing Well developed midstream infrastructure Oil Condensate Denburys Gulf Dry Gas Coast Assets Significant upside…
  22. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 22
    Why We like Penn Virginia Large and contiguous acreage position in Eagle Ford Penn Virginia Fayette County oil window 98,600 gross (84,700 net) acres Other Operator EOR Pilots 90% Liquids / 77% oil production Gonzales County…
  23. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 23
    Transaction Overview Transaction Value: 1.7 Billion; 68% Stock and 32% Cash 833 million equity; 12.4 shares of Denbury for each share of Penn Virginia (est. 191.8 million shares) 400 million cash; 25.86 for each share of Penn…
  24. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 24
    Combination Maintains Industry-Leading Oil Weighting. 100% 97% 2Q18 % Liquids Production Oil Production 94% NGL Production 90% 90% 87% 80% 74% 70% 60% 50% 40% 30% 20% 10% 0% DNR(1) Pro CPG JAG PVAC WLL CRZO WPX HPR OXY…
  25. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 25
    .While Delivering Top Tier Operating Margins. 2Q18 Peer Operating Margins (/BOE) 50 45 40 35 30 25 20 15 10 5 - Pro PVAC CPE JAG CRZO OAS DNR HPR WPX WLL CLR EPE MUR CDEV CRC AMR XOG OXY LPI PDCE NFX SM SRCI SN Forma…
  26. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 26
    .and Creating a Leading Mid-Cap Oil Producer 10 9.1 Enterprise Value(1) ( Billion) 8 7.4 6 6.1 6.0 6.0 6.0 5.4 4 4.5 4.0 3.7 3.3 2 2.9 2.8 2.8 2.3 2.1 1.5 1.3 0 WPX CRC NFX OAS WLL Pro CDEV DNR PDCE AMR CRZO JAG CPE XOG…
  27. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 27
    EOR Opportunity in the Eagle Ford Up to 140 MMBO EOR Potential on PVAC Acreage Significantly de-risked through more than 25 projects covering 200 wells Gonzales County EOR focus with 12 projects Successful peer projects immediately…
  28. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 28
    Applying Leading EOR Capabilities to the Eagle Ford Gonzales County Pilot Primary and EOR Oil Production 14,000 The EOR Process 12,000 EOR Production EOR Forecast Primary Production Rich hydrocarbon gas or CO2 is injected into a…
  29. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 29
    Eagle Ford is Ideally Suited for EOR Penn Virginias Drivers of EOR Niobrara Bakken Permian Eagle Ford Completion Complexity & Contact Area for Miscible Gas 2,500 lb/ft fracs 1,200 lb/ft fracs 1,500 lb/ft fracs 2,000 lb/ft…
  30. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 30
    Historic Eagle Ford EOR Project Performance Eagle Ford EOR Projects Gonzales County Oil Window Normalized to EOR Start Date 11,000 10,000 Pre EOR EOR 8 Gonzales County Projects with Long term 6000 BOPD 9,000 Performance 2.5X…
  31. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 31
    Penn Virginia Acreage EOR Timeline Estimate Eagle Ford stands out amongst other oily unconventional plays as the best EOR candidate Good containment of injected fluid Miscible across wide range of the oil window 1,000 wells expected…
  32. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 32
    Pro Forma Combined Capital Structure Financing Commitment Letter from JP Morgan Chase 1.2 billion new senior secured bank credit facility 0.4 billion senior secured 2nd lien bridge loan Est. Pro Forma for In millions, as of 9/30/18,…
  33. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 33
    Preliminary Combined Pro Forma Estimates Average Daily Production (BOE/d) Estimates thru 2020 assuming 60 70 WTI oil price 92,000 100,000 104,000 112,000 82,600 83,600 10% annual production growth 85% 90% oil production mix…
  34. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 34
    Combined 2019 & 2020 Hedge Positions 2019 2020 Detail as of November 7, 2018 1H 2H 1H 2H WTI NYMEX - Volumes Hedged (Bbls/d) 3,500 Denbury Swap Price(1) 59.05 Fixed Price Swaps WTI NYMEX Volumes Hedged (Bbls/d) 6,433 6,398…
  35. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 35
    Uncommon Company, Extraordinary Potential Enhanced with Penn Virginia Combination Industry Leading Oil Weighting Extreme Oil Gearing Favorable Crude Quality & High Exposure to LLS Pricing Top Tier Operating Margin & Significant Free…
  36. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 36
    Appendix NYSE:DNR 38 w w w. d e n b u r y. c o m
  37. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 37
    Slide Notes Slide 8 Gulf Coast Region Slide 9 Rocky Mountain Region 1) Proved tertiary and non-tertiary oil and natural gas reserves based upon 1) Proved tertiary and non-tertiary oil and natural gas reserves based upon year-end…
  38. Bank of America Merrill Lynch 2018 Global Energy Conference – Denbury Resources Inc. – slide 38
    Non-GAAP Measures (Cont.) Reconciliation of net income (GAAP measure) to adjusted EBITDAX (non-GAAP measure) 2017 2018 In millions Q3 Q4 FY Q1 Q2 Q3 TTM Net income (GAAP measure) 0 127 163 40 30 78 275 Adjustments to reconcile to…

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